Checking the developer before purchasing real estate: how to minimize risks

Cases of “problematic” properties

The Cypriot real estate market is traditionally considered stable and attractive to foreign investors, but stories of frozen construction projects, developer bankruptcies, and years of litigation over contract violations are not uncommon. Almanova Law’s practice shows that most “problems” could have been prevented at the stage of preliminary verification of the developer and documents.

Case 1. Unrealized project in Limassol
A foreign investor purchased an apartment in a new building at the foundation stage, attracted by the developer’s promises of quick completion and a favorable price. A year later, construction was frozen: it turned out that the developer did not have a final building permit, and the land was pledged as collateral for a bank loan. As a result, the buyer was left without an apartment and was forced to sue for a refund. The issue was only resolved after 2.5 years, when a new investor bought the property.

Case 2. Failure to meet deadlines and poor-quality finishing
A group of Almanova Law clients encountered a developer who systematically violated deadlines. Upon delivery of the property, it turned out that some of the work had been performed with deviations from the approved project, and cheaper materials had been used. After going to court and pre-trial negotiations, part of the funds were compensated, but it took another six months to correct the defects.

Case 3. Illegal construction
The buyer purchased a villa in the coastal zone without checking the land documents and permits. Later, the municipality initiated the demolition of part of the buildings due to zoning violations. Thanks to timely legal support, part of the property was recognized as legal, but the procedure for obtaining an “amnesty” and legalization took a year and entailed additional costs.

List of mandatory checks

Checking the developer and the property itself is a key step in ensuring the security of the transaction. In Cyprus, this includes both standard legal procedures and an analysis of the specifics of local legislation.

1. Checking the registration of the developer company

• Make sure that the company is registered in Cyprus, operates legally, and is not in the process of liquidation or bankruptcy (companies.gov.cy).
• Check for licenses and rights to carry out construction activities.

2. Analysis of legal history and financial position

• Request extracts from registers regarding the existence of legal disputes, enforcement proceedings, restrictions, or liens.
• Examine the developer’s credit burden: liens on land plots are a common reason for construction projects being put on hold.

3. Verification of land rights and permits

• Check who owns the land under the property (individual or corporate owner, whether the plot is mortgaged).
• Check for the final building permit (Final Approval), architectural and construction licenses, and municipal approval.
• Ensure that there is a Title Deed or at least confirmation of the intention to issue one (Sales Agreement duly stamped).

4. Review of the sales agreement

• All essential terms and conditions must be specified: price, terms, payment schedule, developer’s liability for delays, warranty obligations.
• The agreement must be registered with the Land Registry.

5. Analysis of warranty obligations

• Find out what is covered by the warranty, what the terms are, and who is responsible for hidden defects.

6. Checking the payment schedule

• It is preferable to divide the payment into several stages, linking payments to specific stages of construction.
• Request bank guarantees or the use of escrow accounts to protect your funds.

7. Study insurance and compensation mechanisms

• Check whether the property is insured for the duration of construction.
• Find out if there are any guarantee funds in case the developer goes bankrupt.

8. Checking the history of completed projects

• Study customer reviews and case studies, request documents on completed projects (photos, acceptance certificates, absence of legal disputes).

Tips for private investors

1. Always hire an independent lawyer
The services of a lawyer specializing in real estate are not a formality, but a tool for your security. A lawyer will identify “weak spots” in documents, help you draw up a competent contract, and protect you in the event of disputes.

2. Do not agree to deals “without verification.”
Deals with “only a deposit,” without registering the Sales Agreement in the cadastre or without verifying land rights, are the main source of risk.

3. Request payment in stages
Standard schemes: 10–30% advance payment, then as construction stages are completed. Do not pay the full amount until you receive the keys and sign the acceptance certificate.

4. Check the developer’s reputation
Study not only the website, but also reviews on specialized forums, in professional groups, and among acquaintances who have already purchased housing.

5. Include unforeseen expenses in your budget
Even with an ideal deal, there may be additional payments for registration, taxes, and minor repairs – usually up to 2–3% of the property value.

6. Keep all correspondence and documents
Keep copies of all payments, contracts, correspondence with the developer, acceptance certificates, and other confirmations — this is your basis in case of a dispute.

7. Monitor the process personally or through a representative
Visit the construction site regularly, check that the actual work complies with the contract, and take photos.

8. Register your property immediately after completion
Do not delay registering the title deed or entering your details in the cadastre, even if the developer promises to complete the paperwork “later.”

Almanova Law’s professional perspective

Practice shows that in Cyprus, those who act consciously and cautiously come out on top. Our lawyers have assisted clients in the most complex transactions, from purchasing new buildings at an early stage to settling disputes with bankrupts and unscrupulous developers.
Almanova Law offers a full cycle of developer verification, documentation, and support for real estate purchases, right up to obtaining the title deed and protecting your interests in court.

If you want to buy residential or commercial property in Cyprus without risk, contact us for a consultation at www.almanovalaw.cy